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Corporate venture in Brazil gains steam as giants amp up startup investments

Corporate venture in Brazil gains steam as giants amp up startup investments
From TechCrunch - September 15, 2017

What a difference one year makes. Since showing noteworthy signs of a maturing tech ecosystemlast summer, corporate venture in Latin America has begun to crescendo in just 12 months, led by Brazil.

According to LAVCAs2017 Latin American Startup Directory, of the 144 early-stage tech companies that received $1 million-plus in funding over at least two rounds and are still operating in Brazil, approximately one-sixth of them secured corporate venture capital (CVC) funding. While this might seem shy compared to half of the rounds in Silicon Valley, it is a significant step for the region and a clear sign that corporations are evolving fast from curiosity to actual action, with skin in the game.

Global giants that have also begun infusing more venture capital into Brazil and LatinAmerica include CVC funds from global innovation brands like Cisco, Microsoft and Qualcomm.At theend of June, Naspers and Innova Capital invested a total of $53 million to fuel the growth of Movile, a leader in mobile marketplaces that in turn also acts as a corporate venture player in the region, with current investments likeiFood. Naspers, a long-time investor in Movile, led the round that injected another $30 million into the company to accelerate its business across LatAm.

In May, SoftBank invested $100 million in Brazil-based 99, an on-demand ride-ordering platform. That new investment adds to the$100 million Series Dround that 99 closed in the beginning of the year led by China-based Didi Chuxing.Founders Intelligence, a specialist digital agency based in the U.K. that advises large corporate and institutional investors on strategy and transformation, recently opened a Brazil office. The group is part of theFounders Forum, a global community of the most successful entrepreneurs, VCs, academics and select, inspiring CEOs.

Local corporate investment in the region is also on the rise. For example, in May,Ita, Brazils largest bank by market value, agreed to acquire a 49.9 percent stake inXP, Brazils third-largest brokerage firm, for $2 billion, and gradually increase its stake over time with an option to buy full control. According toBloomberg, XP is being compared with Charles Schwab Corp. for bringing online investing platforms to the growing middle class in Brazil. XP accounted for 10.8 percent of the equity-trading volume in Brazil for the first three quarters of 2016, a notch up from 9.9 percent in the same period of 2015.

Corporate venture capital in Brazil is bridging the gap between local and global giants and the smaller, scrappier startups in the region, saysFlavio Pripas, managing director atCubo, a So Paulo-based tech hub and transformational project to foster entrepreneurship in Brazil. During the last two years, weve seen an uptick in synergy between big companies and startups working together and corporate venture investments ballooning. Moving into 2019-2020, we expect even more investment activity and well likely see more large corporations buying into entrepreneurial startups for learning, talent and R&D.

An entrepreneurial hub inSo Paulo expands

Since its launch in September 2015, Cubo has helped fast-trackSo Paulos startup scene and provide Brazils largest city and the economic capital of Latin America with an entrepreneurial hub that offers the same setup that American startup founders enjoy.

On August 23, Cubo announced that it is expanding from its current 50,000-square-foot space that holds 250 people, or up to 50 tech startups, to a facility thats four times larger. During the first half of 2018, Cubo will move to its new headquarters in a 12-floor building in VilaOlmpia,the entrepreneurial heart of So Paulo,which will allow it to house more and larger startups, with more than 2,000 daily visitors, 210 resident companies and more than 1,250 people working there daily. Cubo will become the largest entrepreneurial center in Latin America and a lead example for other innovative hubs around the world.

Rising interest in corporate innovation initiatives

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